02 March 2010
But sir payment is made to company who is providing services through engineers. Wouldnt it be covered under definition of "fees for technical services" and TDS liable u/s. 194J ?
25 May 2010
I do not agree with the experts that the TDS would be required to be deducted u/s section 194J. The term “fee for technical services” has been defined in section 194J to mean as defined in explanation 2 to clause (vii) od subsection (1) of section 9 of IT Act. The said explanation is reproduced as following -
Explanation 77[2].—For the purposes of this clause, “fees for technical services” means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction78, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head “Salaries”.]
From the perusal of above definition it is can be observed that the any consideration paid for construction, assembly, mining or like projects will not be considered fees for technical services. The point is distinction here is the like project, which means that the law intend to cover only those projects under technical services which are purely of service nature and not of the nature which provide the service which require a technical instrument / person to provide the services. A repair of a very technical machine may require a technically trained engineer to repair it, but he is not providing a technical service but repair services only which are covered under the exclusion clause of the explanation reproduced above. A cobble also possess technical skill, while mending shoes, he uses, his skill to mend / repair it, can he be called to provide a technical service. Similarly a person repairing a machine, can not be treated as providing the technical services.
Please let me know, if some one is having a differing view.
CAclubindia
